A 40% slump in the number of part-time higher education students over the past two years could harm the economy, experts have said.

Vice-chancellors’ group Universities UK, which promotes further education, said the UK needed to reverse the worrying trend, which it blamed on the economic climate, employers failing to fund further study and the Tory-led Coalition’s increase in tuition fees.

It said part-time study increases employee skills and “cannot be ignored if we want economic growth”.

Nearly half a million people working full-time were studying part-time in 2011-12 to upgrade their skills.

But the number of undergraduates recruited to part-time courses in England fell by 40% - equivalent to 105,000 fewer students. And there are no signs that the decline will be stemmed this year.

In a review of the problem, Universities UK says:”The UK relies heavily on part-time higher education to up-skill the population, in order to meet fast-changing skills needs in a fast-changing world.

“The powerhouse for the new skills base is amongst people already in employment; part-time study cannot be ignored if we want economic growth.”

The review found that many potential students and employers were not aware of the value of part-time study, information on courses can by patchy, finance is seen as a major obstacle and restrictions on loans and funding is hampering re-skilling.

Professor Sir Eric Thomas, vice-chancellor of Bristol University who led the review, said:“The reality is that the UK needs more graduates and relies heavily on part-time higher education to meet these fast changing skills needs in a fast changing world.

“We ignore part-time study’s transformative power for individuals and society at our peril.

“While part-time and mature students are a great success story for the UK, something is going wrong. In England in particular, numbers are declining and do not look like rallying.

“The situation is highly complex. This review is the beginning of a process of universities working together and with partners to take steps in addressing this issue. We cannot and must not give up on these students.”

Sally Hunt, general secretary of the University and College Union (UCU), said:“This has all happened during a recession when family budgets have been squeezed and employers have tightened their belts, making it all too easy to predict part-timers’ haemorrhaging from education.

“We could begin to undo some of this damage by making tuition fee loans available to all part-time students, followed by a major push to get the message out there that continuing education is a realistic aspiration for working adults.”

The Confederation of British Industry welcomed the review’s call for action.

Katja Hall, CBI chief policy director, said: “It’s shocking that the number of part-time undergraduate students has plummeted over the last two years.

“For our economy to stay competitive we’ll need more people with higher levels of skills, so it’s more important than ever that working people have the opportunity to re-train and up-skill.

“The Government should work with businesses to align funding for equivalent or lower qualification courses with the UK’s industrial strategy priorities. And higher education places that are fully funded by employers should be removed from the student numbers quota because they are no burden on the taxpayer.”